Tony Hsieh, a Corporate Culture Icon, RIP

Tony Hsieh, a Corporate Culture Icon, RIP

Last week, we lost a great visionary when Tony Hsieh died from complications from burns and smoke inhalation sustained in a house fire that had occurred nine days earlier, on November 18. Among other things, Hsieh showed how that culture is the most important thing in an organization. He believed that by investing resources in its cultural commitment to customer service, the delighted customers then do the valuable word-of-mouth marketing.

For those that don’t know his background, Hsieh co-founded the Internet advertising network LinkExchange, which he sold to Microsoft in 1998 for $265 million. He then co-founded Venture Frogs, an incubator and investment firm, with his business partner, Alfred Lin. In 1999 following an approach from Nick Swinmurn to invest in Zappos, Hsieh and Lin decided to invest through Venture Frogs. Two months later, Hsieh joined Zappos as the CEO, and by 2009, revenues reached $1 billion, when it was sold to Amazon.

Hsieh stepped down as CEO until August of 2020, but his legacy at Zappos lives on. Hsieh learned how to make customers feel comfortable and secure with shopping online by offering free shipping and free returns. Hsieh’s belief in employees and their ability to self-organize let him rethink Zappos’ structure, and in 2013 it became for a time a holacracy without job titles. Of all the applicants that applied, the company hired only about 1%. Zappos was often listed in Fortune as one of the best companies to work for. Beyond lucrative salaries and being an inviting place to work; it delivered extraordinary customer service.

Hsieh made Zappos fanatical about great customer service. The company was not just about satisfying customers but amazing them. It always sought to over-deliver on its promises.

Also, to ensure great customer service, Zappos mastered the art of telephone service. Telephone services are a black hole for most Internet retailers. For Zappos, they made it key. The company publishes its 1-800 number on every single page of the site. All employees are free to do whatever it takes to make you happy, a step up from the Ritz Carlton where anyone could spend $1,000 to make a customer happy. The call center has no scripts, no time limits on calls, which means no robotic behavior! Zappos employees had an amazing emotional connection to the company through its culture and core values, which then infected their customers. As Richard Branson has said, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of your customers.” Thus, Zappos is a company that’s bursting with personality.

According to Hsieh, if you get the culture right, the rest will take of itself. Besides, Hsieh believed that a company’s brand is just a reflection of the culture. You can see how this value was applied in Zappos’ hiring process.

 

The Interviews

There are two sets of interviews. The first set is done by the hiring manager looking for the appropriate skills and ability to fit with the team. The second is done by HR and is only looking at culture fit. You have to pass both to be hired at Zappos.com because they will only hire people who fit with its culture. Also, regardless of performance, they will fire someone who doesn’t fit with its culture.

 

The Training

All Zappos’ employees, when joining the company, spent the first four weeks going the same training regardless of whether they were a call center rep or a software engineer. The employees receive full pay during training, and this training immerses them in the company’s strategy, culture, and obsession with customers. The training starts with Call Center Training. The next two weeks, they all spent time on the phone taking customer calls because if the brand is all about providing the greatest customer service, then customer service is not a department but the entire company. A side benefit of this approach is that when the busy time of the year occurs, all employees can help in the call center because they have all done it, reducing the need for temporary workers to help. Finally, the last week is at one of their warehouses, picking and packing.

 

The Offer

At the end of the first week of training, all the new employees are offered a bonus of $2,000 to quit and leave the company right then. This is a standing offer that remains throughout the training period. After the training period ends, the offer is raised to $3,000 and extended for a few more months.

As a Harvard Business Review article put it, “Because if you’re willing to take the company up on The Offer, you obviously don’t have the sense of commitment they are looking for.”

The rationale behind the offer was that Zappos.com didn’t want anyone who was there for the paycheck; they wanted people who bought into the company’s culture and vision. Furthermore, those who didn’t take the offer had to go home and tell their family and friends that they had turned down the offer because they believed in its culture and wanted to be a part of such an organization. Zappos.com found that those employees were more committed to the organization when they turned down the offer.

When Zappos started the offer, it was only $100, but the company has increased yearly because they feel not enough people take the offer. According to Hsieh, about 2-3% of employees took the offer. Amazon was so impressed by “The Offer” they have instituted a version of it.

 

Performance Reviews

All employee performance reviews focus on job performance, and are you living and inspiring the Zappos.com culture. If not, you will not remain at the firm. Culture is essential.

 

The Culture Book

Once a year, all employees are asked to write a few paragraphs about what the Zappos.com culture means to them, and these are put in the Zappos.com Culture Book. Their submissions are only edited for typos, but otherwise, everything left as written, the good and the bad. It is organized by department so you can see how culture may differ within departments. Here is a link to one of their culture books.

Some examples of how Zappos employees define their culture.

  • Happiness. Great culture leads to employee happiness. The same way a toxic culture leads to unhappiness. Happy employees mean higher engagement, profitability, and low turnover.
  • People. Our culture would not be what it is today without the people, past and present. We are all protectors and cultivators of the Zappos Culture; it’s what makes it unique and something that changes every day.
  • Being Yourself. I love that I get to be me all day. The culture encourages you to be the same person you are at work as you are at home. I don’t have to pretend to be something I’m not, which makes Zappos a comfortable place to be.
  • Unique. Every company has a unique culture that’s all their own. Just like every person has their own personality, every company has its own culture. Building a culture is a special process that can’t be taken lightly. It’s the responsibility of every employee to represent and foster culture.
  • Fun. Work can be fun! We have 2 annual parties at Zappos. Our Vendor Party where we invite all of our brands to thank them and celebrate our partnership. And our employee holiday party. Past epic party themes have ranged from Mardi Gras and old-school hip-hop to a Hawaiian luau at a waterpark. Each has had its own twists and tricks to surprise and delight partygoers. This year, we invited our vendors to run away with us to the “Untamed Circus.”
  • Perpetual. Your culture doesn’t stay the same; it will continue to evolve. Having a defined set of values will serve as your guide to continue your culture’s growth and evolution in a positive direction.
  • Not Always Measured. A strong culture means lower employee burnout and, therefore, lower turnover. It leads to higher employee engagement and higher profitability. But really, companies should focus on their culture because it matters. Because it’s just the right thing to do. To quote Tony Hsieh, “Just because you can’t measure the ROI of something doesn’t mean you shouldn’t do it. What’s the ROI on hugging your mom?”
  • Work-Life Integration. Companies and employees worry about work-life separation or work-life balance. But why? Wouldn’t you rather be a company where your employees easily combine their full self into everything they do? Wouldn’t you rather work for a company whose focus on culture allows your job to integrate with your life? It shouldn’t be a struggle to find a balance between life and work where you are truly fulfilled and happy.
  • Partnerships. Your vendors have the same objective as you: to sell their product, be successful in their work, and maybe have some fun while doing it. Something unique that Zappos does is allow brand representatives access to all the same sales and inventory information on their products that Zappos has. By working as a team, by partnering, you are setting the stage for success!
  • Real. Your company has a culture. You may not have “planned” it. You may not like it. Or maybe you love it. But it’s there. It is real. You can choose to be thoughtful about your company culture. You can set values and identify the behaviors that you want to be the core of your culture. That part is fairly easy. The hard part is committing to the values once they are set. Living them.
  • Core Values. Values are more than just words; they’re a way of life. They are the foundation of your company culture. We know that companies with a strong culture and a higher purpose perform better in the long run. As we continue to grow, we strive to ensure that our culture remains alive and well.
  • Your Brand. A company’s culture and a company’s brand are really just two sides of the same coin. The brand is just a lagging indicator of the culture.

 

Twitter

The company is very active on Twitter. They introduce employees to Twitter during the training, and at the end of the training, it is up to the employees if they wish to remain engaged on Twitter. Zappos has a Twitter page that aggregates all the employee tweets together, enabling employees to learn about their fellow employees who they may not have met and build better relationships. As a result, many of its employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time.

 

Core Values

Zappos didn’t initially have core values because they felt they had to “real” to the organization and not just some words on a wall developed by a public relations firm. Hsieh and his team emailed all the employees asking what they thought the company’s core values should be and then spent a year going through the responses to come up with Zappos core values. Zappos has 10 core values are they are:

  1. Deliver WOW through Service
  2. Embrace and Drive Change
  3. Create Fun and a Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships with Communication
  7. Build a Positive Team and Family Spirit
  8. Do More with Less
  9. Be Passionate and Determined
  10. Be Humble.

Today, according to Hsieh, if you Google search any one of these core values by themselves, Zappos is among the in first results. The company has interview questions for each one of these core values.

Other interview questions:
#3 Create Fun and a Little Weirdness. On a scale of 1 to 10, How are Weird are you? With 1 being not weird and 10 being very weird? If you are 1 – 2, you may not be too weird. If a 10, maybe too weird. The answer is not the issue, but everyone is different, and what Zappos is looking for work-life integration so that the person is the same at the office as at home. If they can be who they are at all times, then creativity comes out, and true friendships are made.

#4 Be Adventurous, Creative, and Open-Minded. On a scale of 1 to 10 how lucky are you in life? 1 is “I don’t know bad things always happen to me,” and 10 is “I don’t know why good things always happen to me.” Zappos doesn’t want the 1, not because they are unlucky, but that luck is about being open to opportunities so looking for people who are open beyond just the task.

#6 Build Open and Honest Relationships with Communication. Zappos is about Transparency and its beliefs are, “Be real and you have nothing to fear. Your culture is your brand. Don’t try to be someone you are not.” Zappos when they have reports come by, they allow them to go around and talk to anyone because they are comfortable with that. This is because every employee is living the brand, have the same cultural views as the company, and they are authentic

#10 Be Humble. This value causes the most problems in the hiring process because many smart people are egotistical and if you accommodate them, you lose the corporate culture. To look for humility, Zappos had would question the shuttle driver who picked up the applicant up from the airport and drove them around to see how they were treated. If the candidate did not treat the shuttle driver well, they were not offered an offer regardless of how the other interviews went.

Tony Hsieh’s legacy will live on, but I challenge those among you to consider how your corporate culture stands up to Zappos and do you really live it. If not, why not? It could revolutionize your business.

 

(c) Copyright 2020, Marc A Borrelli

CEO, Try Thy Hiring System

CEO, Try Thy Hiring System

Over lunch this week with an ex-colleague, she described the trials and tribulations of her job search. Her frustration was not that she was looking. Rather, she had received a verbal offer from the company but was now dealing with the HR Manager who was playing “bad cop,” contradicting her boss-to-be and backtracking on items that had been agreed upon.

This discussion brought to mind the many horrible hiring experiences I had been through in my career.

Many companies forget that hiring is like going on dates, because you will be married at the end. When we are in the dating world (for those of you who remember), it is an exciting and frustrating time. We are looking for someone who excites us; we wish to excite, be compatible with, and believe together can be more significant than just two individuals. It is the same in the job search. We are looking for organizations that excite us, whose mission motivates us, whose employees impress us, and where we can add value.

In many organizations, those hiring and those in the HR (Human Remains) Department forget this. They don’t realize that perception is reality. Their behavior kills the “dating” process, drives away the “A” candidates, and destroys a successful long-term relationship with those who stay. Things that kill the dating or long-term relationship are:

  • Not treating the applicant with Respect.
  • Not keeping appointments or to the schedule.
  • Bad communication.
  • The offer differs from what you were told.
  • Probation periods.
  • The First Day

One of the common refrains I hear from CEOs is that they struggle to find good people to hire. As I thought of the hiring process trials, I wonder how many good people have driven away because of the process. Given the cost of bad hires and the entire hiring process, how much is wasted because the hiring and onboarding process is so damaging? Remember, Every system is perfectly designed to get the results it gets.” So what is your organization’s hiring system designed to do?

Respect!

Like Aretha Franklin, everyone wants Respect! From my job searching experience, at some point, the applicant is called in for a day of “interviews” where the applicant gets interviewed by four or more people that they will be working with, including their prospective boss. Usually, this day is where the lack of Respect starts.

Some who are doing interviewing feel put upon to interview candidates and come across as either superior or just jerks. During one interview I had, the World Series was on, and the person supposedly interviewing me was watching the game from a small TV that only he could see. As a result, he never heard my answers to his questions, there were long pauses in the discussion while the game absorbed him, and the interview ended early at my suggestion. I declined a second round.  

Now I realize that people have things come up, and some crises have to be dealt with; however, Respect is still required. One company that I interviewed with canceled three separate interviews while I was sitting in the lobby waiting for the interview with the CEO. When on the fourth attempt, I finally did meet the CEO, he was abrupt. He didn’t acknowledge the canceled meetings and the imposition on me. Now, most will say, you are an applicant; why should he. But you never know where the applicant will end up, and one day they might be a customer. In this instance, while I didn’t get a job at the company, its reputation was tarnished in my mind forever, and where I could, I avoided doing business with them. The fact the CEO treated people like that meant to me that they treated everyone like that, and that was not the type of organization with which I wanted a relationship.

Keeping your promises

Once you have been through a few job search rodeos, you know to ask, “What is your process?” Applicants want to know how many interviews they can expect, how long the process should take, where the decision points are, and for “A” players – how they manage competing offers to ensure they get the best one. Unfortunately, many companies forget that their answers create expectations that can drive excellent applicants away or kill any long-term relationship if not met.

My lunch companion complaining that the HR person she was dealing with had failed to make any of the appointments they scheduled, without explanation or reason, but had called out of the blue at other times. This behavior creates the impression that the hiring company is chaotic at best and cannot be trusted worse, so the applicant is likely to question where they are being misled.

Once, interviewing for a VP of International M&A position with a Fortune 100 company, my prospective boss laid out how he saw the department going forward. We spend time discussing my role in creating his vision and the challenges he wanted me to tackle once I started, which he emphasized he wanted as soon as possible. However, he noted that I needed to have interviews with the head of legal and HR before they would send me an offer. Those interviews did occur, and at the end of the interview with the head of HR, she informed me that I would hear back within a week. Three months later, I received a call from someone in HR whom I never met or heard of, offering me a Manager’s role in a different department, which I respectfully declined. I already had another job by then, but again I had lost all Respect for that organization. Interestingly enough, in the 18 years since then, its market capitalization has fallen by 67%.

Bad Communication

Once upon a time, after a day of interviews, I received an email from the company addressed to someone else telling me that they were not interested in pursuing the discussions any further. I replied, thanking them but asking if the email was meant for the other person and sent to me by mistake or meant for me, but they had typed in the wrong name. The response was, “Both.” Such errors don’t impress people.

However, as is my MO, I reached out to the senior HR executive that I had met during my day of interviews, asking for feedback on why I had not progressed through their process. He responded with shock to say that I was still in the process and wanted me to come the next week to see the CEO.

After this great start, one has to once more question the organization.

The Offer Differs from What You Were Told

Often in the process, your potential boss will tell you that some conditions you ask for are acceptable, e.g., start date, vacation, options, etc., only later to be contradicted by HR. HR informs you that this is the firm’s policy, and it is non-negotiable. Managing situations like this are difficult and cause more mistrust because sometimes your potential boss cannot deliver what they promised. As a result, you question their power within the organization, or worse, it creates further doubt about the organization’s core values and ability. In such situations, you begin to wonder if you are dealing with the Job Enthusiasm Killer Department and soon to be working in some Kafka nightmare.

Probation

I know many firms like a probation period to determine if the employee is a good fit; however, remember most employees start a new job full of excitement about what they will achieve at their new company. It is like getting married, and they are waiting at the altar for this wonderful new life when the other party says, “Yes, you are committing to the marriage, and it’s our vows, but me, I am not committing for a few months or so until I am sure.” In such cases, by the time the probation period has passed, the employee has lost their enthusiasm, they are now looking for their next gig, and the company is wondering why they can’t keep good people.

If you have a probation period, inform the applicant upfront, so this doesn’t surprise them. Not only that, but if you do, go all-in with commitment. The more the organization holds back, the less likely there will be a long term relationship.

I once joined an organization, and there was no mention of probation during the hiring process. However, as I logged into my computer on my first day, I could not access the network. I was informed that during probation, they kept you off the system. Thus, any files I needed had to be copied onto a disk (Yes, a bygone era) and brought to me, or I had to give them to whoever needed them on a disk. This event was the first I had heard about any probation, and the message was welcome to the team, you second-class citizen. Nonproductive and soul-destroying!

At the end of the first week, my boss asked me to go to Japan, Taiwan, Hong Kong, and Thailand on a Business Development trip. When I asked when I could expect my business cards, I was told that new hires could not get business cards until they had finished their probation. Since I now knew I was on some form of probation, I tried to explain to HR that in Asia, business cards are essential; however, the person would not yield. As a result, I traveled with some I printed up myself, which looked like it and I am sure did lots to promote the organization’s standing in the Far East. Once more, perception is reality, and I am sure the HR person was “following orders” given by someone who had never traveled internationally.

The First Day

Data shows that over 50 percent of new employees regret the decision on their first day, and after three weeks, it is closer to 70 percent. Suppose you accept Richard Branson’s view that happy employees make happy customers. In that case, you will realize that if your organization is one where 50 percent of your new employees regret their decision to join you the first day, you have a huge uphill task to build customer satisfaction.

I have been among the 50% because the first day was so demoralizing. As I have said above, you arrive at the new job full of excitement only to be sent to HR hell to fill out a massive pile of forms. Surely these could have been sent beforehand, and you could bring them completed. There is nothing in them that I have ever seen that is so sacred it could not be shared outside the organization.

After this beautiful ritual, you are shown to your desk, whether in an office or cubicle. For some reason unknown to me, in every new job I have had, my boss has not been there my first day to meet with me and show me what I need to tackle. As a result, you arrive to a note saying, “Welcome and make yourself comfortable.” They may have scheduled some meetings for you with other people, but it usually mentions a name and not who they are and how you will be working with them.

A colleague once told me that she went to the stationery cupboard on her first day to get some supplies, only to be berated by a PA who informed her that her department could not access that cupboard. Again, thanks, great to be on the team.

If you are lucky, some of your workers may invite you to lunch on your first day. Indeed this is the least that they could do to make you feel welcome. So, after a wasted day trying to figure out what the unwritten rules are, where the political minefields lie, and whom you can trust, you head home wondering, “What the hell have I done?”

As I have asked before, is your onboarding process more akin to waterboarding?

I love Cameron Herold’s attitude of having a new employee party their first day to welcome them to the organization. However, when they leave, there is no going away party because you will no longer add any value to the organization. Furthermore, that night they ask for your bucket list and commit to helping you achieve an item on it during your first year. Now that is a welcome and one which makes you want to die on the hill for that company.

What to do?

A CEO friend of mine once told me that he used to call the CEOs of companies that his sales team had targeted. The purpose was to find out how the sales process was going and if his organization was responsive to the potential clients’ needs. He found this process made his sales team far more responsive to potential clients, honest with their targets, and he learned what worked and didn’t in the process.

If you are struggling to find good people, question if your system delivers the results it is designed to provide. Review your hiring process to figure out what is going on. I would suggest sometimes doing surveys with applicants to find out how they found the experience of applying for jobs with your companies and new hires. Remember back to when you started your career with excitement, what tied you to a boss or company, and what drove you away. Make sure your organization is doing the former and not the latter.

(c) Copyright 2020, Marc A. Borrelli

What is Leadership?

What is Leadership?

I was on an interesting call this week where the question of “What is leadership?” arose.

Today, there are many definitions, and the concept of leadership has changed over the last seventy years. However, I think the adage that “Great leaders are forged through adversity” still holds. In adversity, great leaders come to the fore as they can get their teams to outperform others during that period when everyone is struggling to achieve their goals and leave a lasting legacy. To me, the “adversity” qualifier is like Warren Buffett’s saying about you don’t know who is swimming naked until the tide goes out; well, adversity is the tide going out.

So, what defines a great leader? Let’s start with the things that don’t.

  • Leadership has nothing to do with seniority or one’s position in the hierarchy of a company. In most cases, people are promoted to leadership positions because of tenure or technical skills; leadership ability is rarely considered.
  • Leadership has nothing to do with titles. Just because you have a C-level title doesn’t automatically make you a “leader,” and you don’t need a title to lead. A great example is Greta Thunberg who has become a leader but without title or seniority.
  • Leadership has nothing to do with personal attributes. While people often associate “leader” with a domineering, take-charge charismatic individual, leadership isn’t an adjective.
  • Leadership isn’t management.  This is the big one. Leadership and management are not synonymous; managers manage things. Leaders lead people. Given the above qualifiers for what leadership is not, some definitions try to capture it but fail.

“The only definition of a leader is someone who has followers.”

This definition, while simple, fails because it is similar to titles. In the video above, the first one dancing is the leader, but I doubt he is still leading once the followers start.

“Leadership is influence – nothing more, nothing less.” This sounds good, but what is the source of influence? If it the leader’s position, e.g., the CEO or the power to cause harm, e.g., your kidnapper, I wouldn’t define it as leadership.

“Leadership is the capacity to translate vision into reality.” Many can translate a vision into reality. An architect or a builder? A painter or sculptor? But I wouldn’t define them as leaders because there are no “others” that they are leading.

Maybe looking at the traits of great, leaders we can better come to a definition. What are the traits of great leaders?

 

Acknowledge people’s fears, then encourage resolve.

The first part is empathy. While this is a personal attribute, which is excluded under the definitions above, I believe without it, you cannot be a great leader because it enables so many of the key attributes. By acknowledging people’s fears, we don’t cover up the crisis and deny its existence. But with the fears on the table, we can then address them and encourage resolve to overcome them. In a crisis, everyone knows that things are bad, but much of the energy and fear exists because of the unknown. Being honest about the situation and facing it allows people to come to grips with the unknown, which enables them to move forward.

 

Give people a role and purpose.

Real leaders charge individuals to act in service of the broader community. They give people jobs to do. But I would add to that; they frame everything within the outcome being sought so that the jobs are not mindless but have a purpose which they can see. It is not about the leader but the great community. I think Shackleton was a great example of this, but I always fall back to David Marquette’s Turn the Ship around.

Inspire others to see opportunities in everything.

There is no playbook in a crisis, so it is up to the leader to be open-minded enough to find possibilities that will help serve their community through their discussions with their team and their data.

 

Be flexible to anticipate the unexpected.

As said above, there is no playbook in a crisis, and leaders must quickly get comfortable with widespread ambiguity and chaos. To get out in front of the crisis they cannot be fixed on any one route but need to see around, beneath, and beyond what they seek. To fully succeed here, they need to get their followers to be flexible, which requires them to understand the greater goal and their role in it and use its core values as their guidelines.

 

Manage everyone’s energy and emotion, including their own.

Crises are exhausting, taking a toll on all of us and possibly leading to burnout. A critical function of leadership is to keep your finger on the pulse of your people’s energy and emotions and respond as needed.

 

 Unleash their team’s passionate pursuits.

Passion is what drives experimentation and learning. If everyone is passionate about the outcome, they will seek new ways of addressing the crisis, and great discoveries will be made. Not only will passion drive greater discovery, but it creates more energy. The best example I can think of Apollo 13.

 The Respect to Lead to Leave a Legacy.

Legacies are born during crises. While leaders are most respected based on how well they reacted and responded to all the chaos and uncertainty around them, I believe the key measure is how much of a legacy they leave. Does the organization continue to thrive when they are gone? Do the others in the organization go on to greater and better things? Are the behaviors that enabled it to survive and thrive now part of the company’s DNA. There are many leaders who get the organization through a crisis but leave no lasting mark. I would argue, that they are not great leaders.

So, in conclusion, I would define Leadership as, “A process of social influence, which maximizes the efforts of others, towards the achievement of a goal, and leaves a lasting legacy.”

The key things about this definition are:

  • Leadership stems from social influence, not authority or power
  • Leadership requires others, and that implies they don’t need to be “direct reports”
  • No mention of personality traits, attributes, or even a title; there are many styles, many paths, to effective leadership
  • It identifies the maximization of “efforts”
  • It includes a goal, not influence with no intended outcome
  • Finally, it ties in with a lasting legacy.

Not everyone will become a great leader, but everyone can become a better leader and your organization will thank you. So, start your journey today and if you need help, call me.

 

Copyright (c) 2020, Marc A. Borrelli

Yes, We Are a Country (Team) Divided

Yes, We Are a Country (Team) Divided

So, as we await the final election results, the only thing that is abundantly clear is that we are divided as a country. Fifty percent wanted a change, and the other fifty percent didn’t. I don’t intend to discuss the whys or rights of either side. However, this has enormous implications for any leader.

As you sit with your team, you have to realize that fifty percent don’t agree with your view of the world, regardless of what they say, and fifty percent do. Previously, the difference was harder to discern. People kept opinions to themselves and didn’t get drawn into political discussions. However, with the polarization of COVID, we now know where people stand from how they feel about masks and social distancing. Regardless of what your people say, they are already deciding how they feel about issues and teammates, those they disagree with, and those they are damning.

However, as a leader, you have to get all these people to pull together, support each other, and achieve more as a team than they can individually. The key is, how?

There are two ways to lead people:

  • Divide people. Create a mutual enemy and lead a crusade to conquer it. Life becomes a life or death situation; the sense of urgency provides unconditional support. Conquering, winning at-any-cost, is all that matters.
  • Unite people. Find a common cause, a shared ambition, and inspire people to build it with you. Make it a life quest, and people are united by the the mission to build something bigger than themselves. The desire to leave a lasting legacy is what keeps the people joined in the mission.

So how do you intend to lead your organization?

 

Dividing People

The dividing strategy has been around since the beginning of time; Julius Cesar’s supposed strategy for conquering Gaul was “Divide et impera.” Gaul. As a leader, Nicholas Machiavelli believed it’s better to be feared than to be loved, and the leader should rely upon the art of manipulation to build followers and allies. As George Orwell put it so well in 1984, “The Party believed that they could endlessly engage in a war to keep peace in the country.”

Such leaders use the illusion of division to create a fictional reality. They are compulsive storytellers, using every opportunity to feed anger and violence. One of the problems is that anger is a powerful motivator but hard to sustain in the long run. So, the stories and illusions have to become worse to drive the same level of anger. It is not sustainable.

In some organizations, the competition is the enemy and the desire to destroy it at costs. Someone once told me that everything was portrayed as a life and death battle to destroy their biggest competitor during their corporate orientation. Leadership used every war analogy, including death chants about the competitor. One day he was ill with 104 fever, and there was a blizzard outside. He called his superior to say that he could not make it in, and the superior’s response was, “You will allow [the competition] to fight for another day, causing untold damage on us. Get up and fight to kill them. We need it done today.” They urged him to die on the altar of the war between the companies.

The problem with the deception strategy is it only works in the short term; in the long run, people separate fiction from reality. Leaders who use the divide and conquer approach often create a de-individuation environment, where individuals let go of self-awareness and self-control to imitate others, and one’s individuality becomes lost in the group identity. In such a situation, the organization’s threats are groupthink, and no one stops asking the critical questions as the mob rushes forward with the pitchforks and torches.

When we are so polarized and angry, many may think the divide and conquer strategy the best, as people are already on that path, and we have to refocus the anger. However, when angry and divided, divisions are more easily sown within the group. Suppose problems arise within the organization, the anger quickly moves from an outward focus to an inward one, e.g., production is not keeping up with orders, or customer service is losing our customers. Once the divisions start occurring within the ranks of the organization, it is hard to stop. Enemies and anger spread, and trust falls. The team is dysfunctional. The company is adrift without strategy or guidance, as those within fight among themselves, but the leader is safe.

Focusing on division and a common “enemy” makes it hard to live your core values in many cases. If one of your core values is to treat everyone with respect, then it must apply to your perceived “enemy.” However, that goes against the strategy and dies. Soon there are no core values left, and the only guiding light is winning at all costs. In this environment, the ends justify the means, and the organization destroys everything. As Attila the Hun said, “There, where I have passed, the grass will never grow again.”

I would argue that today, this is the worst way to lead. Leaders choosing this tactic are playing with fire and one that they cannot control.

 

Uniting People

Leaders who unite people are “builders.” They take a different approach; they don’t tell you to follow orders, but rather to “Join me and follow the mission, not me.” Such leaders and their follows are driven by a purpose bigger than themselves. They are more focused on the impact on society than quarterly earnings. It is not that the latter doesn’t matter, but making money is not enough. Studies show that when leaders connect to a meaningful purpose, it is more likely for employees to connect to it and work harder to achieve their goals.

Thus, it takes far less energy to motivate the employees and customers because their excitement with the mission does a lot of it for you in such an environment. The focus on the mission also allows the team to collaborate effectively. The principle is the mission’s success, which makes them feel good, overriding the divisions in other areas.

However, while getting everyone to follow the mission, there are two dangers: the rise of the “Messiah” within the organization and groupthink. First, leaders focused on the task can become the paramount leader where what they say goes, as no one is allowed to question the Messiah. Second, groupthink creates such an environment where, once more, “the ends justify the means.”

The organization’s core values are essential to ensuring that neither of these outcomes occurs. If, as above, a core value is “Treating everyone with respect,” then those who disagree are not denigrated in such an organization. They may not be on the team, but hatred is not directed at them, and as such divisions are less likely to occur.

In today’s environment, it is worth revisiting your mission, “Why do we exist?” It is also a great time to look at your core values and see how they fit with the organization’s mission and drive behavior. In many organizations, I am aware of, they have core values, but even the CEO cannot articulate them at a moment’s notice. In such organizations, they are just words on a wall. They are not core values. To find your core values, ask your team. “What are the top, non-illegal activities that would get you fired from this organization?” The answers are the opposite of your core values. Compare them to those words on the wall – do your people know and live your core values?

However, while we often have our core values posted within the office, we don’t ask what they mean. Take, for example, Google’s corporate philosophy of “Don’t be evil,” which the company had in the 2000s. An ex-Google employee told me that there was lots of internal debate about its meaning and what actions were allowed. Many core values sound good, but on examination, the organization has done little to define what they mean or show how to live them in difficult situations. Here corporate folklore is of enormous importance. Your organization needs lots of stories that demonstrate the living of its values that are shared with everyone, from new employees to customers. As humans, we love stories and relate to them more than words. Suppose your organization has many stories about how it lived its core values in difficult times. In that case, your employees will know the corporation’s values and how to behave when similar times arise. As I am sure few companies will have a core value that includes the words, hate, discrimination, etc., these behaviors are less likely to develop.

In a divided country, you need to reinforce your core values, live by them, and, as Jim Collins says, be prepared to take a loss to live by them. Start recognizing everyone in your organization that does demonstrate your core values and allows others to do the same at meetings. It needs to be a part of your hiring and review process, as this is the glue that will hold the organization together in a COVID world. When you are hiring, looking where the applicant worked previously, and that organization’s core values may help you decide if they will fit with your team.

Our core values are far more similar among most of us than we realize. If we believe in those together, we can overcome our other divisions and have a friendship because the bonds outweigh the divisions.

Finally, I believe teams need to look at Special Forces teams, e.g., SAS, Seal Team 6, SBS. What I think makes them so effective is that:

  • They are solely focused on the mission;
  • Their core values are paramount;
  • They discuss openly and to determine the best plan to execute the mission. Nothing is personal, but everything is open to challenge;
  • Once the plan is adopted, there is full buy-in from the entire team. No one is sitting with their arms folded, hoping it fails so they can say, “I told you so.”
  • They know when the mission is no longer viable, and they need to determine a new mission; and
  • They undertake extensive post mortems on the plan to learn how they could be more effective and what mistakes were made.

At this time, I would suggest all leaders look to their mission and core values to unify their teams and lead their organization more effectively through the country’s divided landscape. Reach out if you need help defining your mission, BHAG, and core values.

Oh Boy, Does the U.S. Need Infrastructure!

Oh Boy, Does the U.S. Need Infrastructure!

What I have noticed

When I arrived in the U.S., the first thing I noticed was all the wires that hung from poles along every road and provided squirrels with their spaghetti freeways. Other than these wires’ unsightliness, I could not understand why they weren’t buried like they were in other countries where I had lived.

Other areas of infrastructure that those of us who have traveled through Europe and Asia notice are:

  • The poor state of the roads, airports, and trains.
  • The lack of wireless coverage and high-speed internet.

Why are things this way in the U.S.? Well, as far as I can ascertain, the reasons are:

  • It is cheaper for the power companies to repair fallen lines than bury them;
  • No one wants to invest in the roads because it will raise government debt;
  • No one cares about trains because they are expensive, and cars are better;
  • There is no pressure to roll out fiber and make it available; and
  • The cell companies will get to it when it makes a return.

 

Why Does It Matter?

Now I know many of you are already up in arms, saying that the U.S. doesn’t need to follow anyone else’s example, and the U.S. cannot learn anything from anyone else.

 

Power Lines

However, I live in Atlanta, probably 5 miles from the State Capital, as the crow flies. On Wednesday, Hurricane Zeta passed through. As a result, we lost power for 36 hours, so no computers, phones, or the internet. We were not alone. According to the Georgia Power website, there were hundreds of thousands like us.

In our new world of working from home, we have two fundamental issues. For employees to be productive, they need power and internet access, as everything is now in the “cloud.” As someone recently remarked, Maslow’s hierarchy of needs has added a new bottom layer: battery storage and high-speed internet access. With COVID, there is a migration of people from cities to small towns across America. Blue Ridge to the north of Atlanta is experiencing a boom and a recent article referred to the numbers of people moving West. However, work in these small towns requires reliable power and high-speed internet, neither of which are readily available. Zeta tore through northern Georgia, and over 1,000,000 homes lost power. Twenty-four hours later, that number is still around 250,000.

In Georgia, Georgia Power and others are constructing Plant Vogtle, Units 3 and 4. Plant Vogtle is a nuclear power plant, and the original estimated cost of Units 3 and 4 was $14 billion when construction began in 2013. Currently, the estimate for these is $25 billion and rising as neither is on schedule. In 2013, it was apparent that nuclear power was far more expensive to generate at operating levels than natural gas (nearly 3x). The cost of the plant was unsustainable without enormous subsidies. If Georgia Power had built natural gas generation and spent the difference on burying power lines, the plants would be open, and we would have a more stable electrical supply.

 

Planes, Trains, and Automobiles

Peter Zeihan said, “The balance of transport determines wealth and security.” According to Zeihan, the Mississippi-Ohio river system is the most important globally and a vital driver of the U.S. power and wealth. The Mississippi and Intracoastal system accounts for 90 percent of the United States’ 17,600 miles of internal waterways. This length alone is greater than the size of all the inner waterways of the rest planet combined. Furthermore, America’s rivers transform cities in the interior such as Pittsburgh, St. Paul, Sioux City, and Tulsa into ocean ports. Finally, the U.S. has more “port potential” along its coast than the rest of the world combined. According to Zeihan, “The Chesapeake Bay alone boasts longer stretches of prime port property than the entire continental coast of Asia from Vladivostok to Lahore.” The United States has more port possibilities than it has ever needed. However, it has been the world’s largest producer, importer, and exporter of agricultural and manufactured goods for most of its history.

These geographical advantages did several things.

  1. They generated enormous amounts of capital. Any culture based upon waterways like the U.S. will be ridiculously capital-rich.
  2. They knit the country together culturally. Rivers promote unity, and an integrated maritime network promotes unity over a far broader swath of territory. As a result, the U.S. has one of the most robust national identities of the major powers.
  3. The U.S. didn’t have to invest in expensive infrastructure and military investments in its early history that other countries made. For example, Germany had to develop a road system in the 1830s and 1840s to provide what the U.S.’s rivers gave and then update it further in the 1930s.

With all the benefits of rivers, today, the U.S. is also reliant on planes, trains, and automobiles for transportation.

Planes
U.S. airport infrastructure is not what it should be. From their three largest funding sources, U.S. airports collectively received, on average, $14 billion annually for infrastructure projects between fiscal years 2013-2017. However, airport officials said that these combined funds might not be enough to cover the costs of their planned infrastructure projects. Estimates are that projects will cost an average of $22 billion annually between fiscal years 2019-2023.

Air transportation services support 1.4 million U.S. jobs, and international tourism brings in hundreds of billions of dollars of tax revenue. But some studies have found that delays and avoided trips due to the poor state of the nation’s airports cost the economy over $35 billion per year.

Trains
To be clear, I like rail and enjoy using it, so I must be biased. However, in looking at the U.S. while I think high-speed rail would be excellent, that is not what I think is needed. I doubt many would take a train across the country anymore since planes do it more efficiently. However, building better rail connections between cities would be a business generating. Again, not looking at high-speed rails like Japan’s Bullet trains or France’s TGV, but rather what is considered express trains in Europe, which travel at 130 mph on upgraded conventional train lines.

The problem in the U.S. is that the automobile industry pushed to get rid of passenger rail from 1930 and succeeded in nearly doing so. While the U.S. freight train services are the most effective globally, passenger rail is the Ugly Stepchild. Amtrak uses freight lines for its many of its passenger trains; however, the freight lines are not suitable for passenger traffic, keeping the average speeds below 60 mph. Besides, Amtrack has more than a $30 billion backlog of infrastructure investments.

If I could take a train from Atlanta to Charlestown, Savannah, Jacksonville, Chattanooga, Nashville, or Charlotte that did 130 mph and provided me with high-speed internet, I would never drive again. Combine that with a car rental in the destination city, e.g., ZipCar, and I wouldn’t give it a second thought.

Finally, I expect many smaller U.S. towns to find that they are no longer serviced by airlines as the U.S. airlines retract services with the downturn in business travel. Thus, they will only be serviced by road, making them less appealing to business.

Many complain about the high cost of rail, but analysis has shown that rail is cheaper overall than roads. This analysis uses the cost of rail construction in the U.S., which is higher than in other industrial countries. The cost of infrastructure construction in the U.S. is higher than in other industrial countries.

Automobiles
The U.S. benefited from The Interstate Highway Program started by President Eisenhower in 1956. Currently, about twenty-five percent of all miles driven in the U.S. is on the Interstate System. These road and river systems helped the U.S. continue its growth through the post-war period.

However, our road system is no longer the envy of the world. According to estimates, the delays caused by traffic congestion alone cost the economy over $120 billion per year. It needs investment and improvements. Congress’s failure to increase the fuel tax is an embarrassment, and failure to keep our infrastructure current will pose significant barriers to growth in the long term as transportation costs and delays increase.

Besides, COVID has decimated state budgets everywhere. Now the states have to fix many of these highways but don’t have the funds to do so, and Congress’s reluctance to help is just kicking the can down the road and increasing the ultimate bill.

Finally, with automobiles, Elon Musk and Tesla are changing the landscape. However, with the Administration’s opposition to electric vehicles, the U.S. is falling behind. Today the U.S. has about half a million charging stations in the country, of which 100,00 are public charging stations. In China, there are 808,000 charging stations, of which 330,000 are public. As of 2019, Europe had 170,000 public charging stations.

Furthermore, expectations are that European distribution will grow faster than the U.S.’s over the coming years. As other countries increase their rollout of charging stations, electric vehicle adoption will grow more quickly in those countries, making it harder for the U.S. to maintain its leadership in the development of electric vehicles. That trend has started with many car manufacturers launching E.V. models in Europe and China and Tesla opening production facilities in Shanghai and Germany.

 

High-Speed Internet

With high-speed internet, there is both wired and wireless. As we all work from home, reliable high-speed internet is a requirement, not a luxury. Those without it will not be able to get or maintain higher-level jobs.

Wired
Currently, fiber broadband is now available to more than 30% of households across the U.S. Distribution increased from 12.2 million households in 2008; however, much of the increase was due to AT&T deploying fiber to 12.5 million customers under an agreement with the government for approval to buy DirecTV. That buildout is finished. As a result, it appears that Google Fiber has effectively stopped its rollout with only one new location in the last four years.

While only 30% of homes have potential fiber access, only 18.6 million households in the U.S. have a fiber subscription. While the many rural U.S. areas with low housing density explain some of the shortage, city deployment is not significant. Millions of Americans have cable as their only choice for high-speed broadband. Another study found that Comcast is the only choice for 30 million Americans. Charter is the only choice for an additional 38 million Americans regarding broadband speeds of at least 25Mbps downstream and 3Mbps upstream. Americans have no choice in areas that don’t have cable and have to rely on DSL for wired access.

As a result of COVID, many are looking to move to smaller towns where they grew up or sought a better lifestyle. However, most of these towns have little high-speed internet or options for homeowners. Furthermore, with COVID, sales and tourism tax revenues have fallen, which will result in cuts in many essential services.

U.S. fiber access is far behind numerous other countries, according to a report. Spain, Portugal, Japan, and others are above 90%, while countries such as Norway and South Korea are above 80%.

 

Wireless
The U.S. leads the development of 4G mobile speeds and wants to ensure it retains its leadership with the development of 5G. The current Administration’s fight with China and Huawei Technologies are part of this desire for industry dominance. Also, U.S. policies will require coordination with other competitors who make up the global 5G supply chain. Otherwise, the strategy could split the development of standards, essentially setting up incompatible technology paths for 5G, e.g., 3G.

While these policies are slowing China’s development, it will take more. Huawei remains the top filer of standard-essential 5G patents, with the telecommunications giant set to remain a leading global supplier of 5G equipment. If Huawei can establish itself as a low-cost provider as it did with 4G, carriers using its gear will be able to deliver low-cost 5G service driving broader adoption. Furthermore, experience with large rollouts of 5G will make Huawei a key provider.

Through COVID, China has continued to invest heavily in its 5G rollout for the supposed purpose of monitoring the spread of the disease. Regardless, it now has a significant lead with 480,000 5G base stations nationwide and more than 100 million 5G connections. According to Frank Meng, Chairman Qualcomm China, some 15,000 5G base stations are being installed weekly in China, and the nation is likely to have more than 600,000 5G base stations by the end of 2020.

Today, entry-level 5G plans in China cost $10, done from $18 when launched in November 2019. U.S., operators, like Verizon, are charging $10 a month — on top of its lower end plans — to customers for 5G service. This pricing difference will slow down U.S. adoption vs. Chinese.

Overall, the West has fallen behind in the competition for leadership of the 5G transition, a reality that has enormous economic implications and risks the West facing a 5G supply chain provided by Chinese companies.

In the U.S., the leading wireless providers are rolling out 5G. However, in testing, a 5G phone does nothing more than 4G. 5G download speeds are roughly the same as on 4G LTE ones, and in some places, 5G phones are slower.

The 5G is expected to:

  • Enable more excellent IoT connectivity;
  • Remote robotic surgery in healthcare;
  • Safter transportation;
  • Self-driving cars; and
  • Improved manufacturing

Thus, 5G will be the new roads and rivers of the twenty-first century, and the U.S. needs to invest in 5G infrastructure to ensure it realizes its benefits and retain its leadership position.

 

So, What Needs to be Done

Congress needs to address infrastructure and provide funds for it. The returns from improvements in the above will far in excess anything that tax cuts have ever offered. Such projects are not “shovel ready,” and choosing how to will not be easy. But it is up to all sides to work for a solution which allows improved results and less waste. We need to realize there are no easy bumper sticker slogans solutions. But we need to educate ourselves about the situation.

 

Copyright (c) Marc A. Borrelli, 2020